UPDATE 1-OSX seeks $5.6 bln in Brazil's biggest 2010 IPO

* OSX sets 1,000 reais-1,333.33 reais IPO price range

* Shares expected to trade as early as this month

* Shipbuilding industry seen drawing massive funds (Recasts to add details, background on sale, bylines)

By Guillermo Parra-Bernal and Elzio Barreto

SAO PAULO, March 2 (Reuters) - OSX, the Brazilian shipbuilder owned by billionaire Eike Batista, plans to raise up to 9.92 billion reais ($5.6 billion) in what could become the nation's largest initial public offering this year.

Rio de Janeiro-based OSX said in a newspaper statement published on Tuesday that its shareholders plan to offer up to 7.44 million voting shares at a price range of 1,000 reais to 1,333.33 reais. OSX is expected to start trading March 19.

Shipbuilding is expected to thrive in Brazil, after state-controlled oil company Petrobras in 2007 made the biggest offshore oil discovery in the Americas since the 1970s.

The company said in 2008 it planned to spend $30 billion on drill ships and platforms to tap oil reserves that are sitting about seven kilometers below the ocean seabed.

President Luiz Inacio Lula da Silva has urged Petrobras to favor local shipbuilders and service providers over foreign companies to create local jobs and reduce dependence on imported equipment. His efforts are helping revive an ailing sector that in the 1980s was vying with Japan and Singapore shipbuilders in terms of size and global reach.

Currently there are more than a dozen shipbuilding companies operating in Brazil, including Norway's Aker Yards (AKER.OL) and Sembcorp Marine (SCMN.SI), the world's second-largest oil rig maker.

Local companies currently involved in the construction of massive rigs and ships include construction conglomerate Grupo Queiroz Galvao, Wilson & Sons (WSON11.SA), and Construtora Norberto Odebrecht, Brazil's largest civil construction group.

Last month, South Korea's Hyundai Heavy Industries agreed to take a 10 percent stake in OSX, a move that could help the company bid for future orders.

OSX hired Credit Suisse (CSGN.VX) as the lead manager for the offering. The investment banking units of Banco Bradesco (BBDC4.SA), Itau Unibanco (ITUB4.SA), BTG Pactual and Morgan Stanley (MS.N) will also help arrange the deal, OSX said.

IPO BOOM

Batista, Brazil's richest person according to Forbes magazine and the owner of a fortune estimated at $15 billion in mining, energy, and oil and gas companies, is tapping into a booming IPO market that last year was the world's most active after China.

Brazil was home to two of the world's three largest IPOs in 2009 as investors scoured riskier emerging markets for returns.

Four companies including real estate developer PDG Realty (PDGR3.SA) and shopping mall operator Aliansce (ALSC3.SA) have launched either initial public offerings or secondary share sales in Brazil so far in 2010, raising a combined 3.3 billion reais.

Two offerings were priced below the expected range and three deals were either canceled or delayed amid a surge in global risk aversion at the start of the year.

But analysts and investment bankers expect 2010 to be a banner year for equity sales in Brazil as investors seek to benefit from an expected gross domestic product growth rate of almost 6 percent in the country this year.

($1=1.798 reais) (Reporting by Guillermo Parra-Bernal and Elzio Barreto, editing by Dave Zimmerman)